A Buy-to-let mortgage is offered when you seek to buy a property to rent out – i.e. it is not your main residence. People take this step for investment purposes.
Buying to let is a great option if you want to get started in property investment, but you need to bear in mind that lenders often see buy-to-let customers as a bigger risk, particularly if you have an existing mortgage on your home or on other properties. For this reason, mortgage rates often tend to be higher than for standard residential mortgages.
Other factors to consider with a buy-to-let mortgage is that you must have at least a 25% deposit and you must be able to prove that your rental income is likely to be at least 125% of your mortgage repayments. In other words, if your repayments are £500 a month, the monthly rent for the property must be at least £625. This is because you will still have to pay your mortgage if the property sits empty or if you have to pay for maintenance work; the extra money is supposed to act as a sort of buffer, making you a safer bet for a mortgage as you are more likely to be able to afford the repayments.
If you’re new to the buy-to-let game, it’s always a good idea to talk to a financial advisor before you take the plunge:
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Our initial mortgage consultation is free. We will charge an application fee of £395 to process your mortgage.